The appraisal coming in below the approved sales price happens quite often these days, as Short Sale lenders are taking a very long time to approve transactions.
What to do? Write an amendment to the purchase contract indicating how much you are willing to pay for the house, and attach the appraisal. Have the listing agent present this information to the short sale lender. The reality is, if it is not worth the approved price, the short sale lender will NOT get more for the home in a foreclosure than what you are willing to pay.
Do short sale lenders negotiate the deal? Some do, some don't. It is mostly dependent on how the listing agent presents the fact to the short sale lender. It is, however, also dependent on how the short sale lender presents the facts to the underlying investors on the seller's loan.
The reality is you have several choices:
1. Get another appraisal.
2. Try to negotiate the price down to the appraised value.
3. Come up with cash to close the gap between the appraised value and the sales price (not a great idea unless you really really really love the home).
4. Walk away.
My suggestoin is do Number 2. I have been succcessful on negotiating lower sales prices on several short sales that I listed, and I only had to present the short sale lender with a copy of the appraisal on about half of them. However, giving the copy to the lender up front makes your case much stronger. Hope this helps. Dare to Dream.
Shel-lee Davis, CDPE, SFR, QSC
Your Real Estate Consultant for Life
RE/MAX Palos Verdes Realty
Have your agent pull other comparables that would better demonstrate the value - making sure that they are within a one mile radius, even if they aren't in the same development, and the newer, fresher, the better, and ask the bank to have the appraiser reconsider or correct any errors found. Sometimes you'll get at least some more value. On a recent sale, we were sure the appraisal was too low - the short sale lender agreed to come up part way between the appraisal and the contract price, but wanted someone to bridge the gap. The appraisal reconsideration gave us what we needed to work with, and we were able to keep the transaction together.
Yes, we submitted in an addendum today with lower price (a bit higher than the appraised value) to the lien holders. Waiting for them to response. we have a really really tight deadline to close by 5/15.
Keeping our fingers acrossed..
Yes, they do negotiate. Make sure you are working with a knowledgable Realtor whos knows about short sales. The process may take longer but you can try to negotiate for sure. No harm in trying. Good luck.
Kiet Truong (Robert)
556 Las Tunas Dr 101
Arcadia CA 91007